‘Promise zone’ grantee with ties to Obama failed to disclose lobbying

A California nonprofit involved in the Obama administration’s “promise zone” initiative failed to disclose that it spent $140,000 lobbying the White House and other federal agencies.

Records show that in 2009 and 2010 Youth Policy Institute (YPI), which provides training and education services to low-income Los Angeles residents, hired Bryan Cave LLC to lobby the executive office of the president and federal agencies such as the Department of Education and the Department of Housing and Urban Development for “Federal Support for social services for the Los Angeles Metro Area.”

That lobbying, which was not reported by YPI, comes to light as Los Angeles area politicians have expressed concern over the lack of transparency in the awards process for Obama’s promise zone initiative.

Cause of Action, a nonpartisan government accountability organization, reviewed YPI’s 990s and its single audit forms on behalf of TheDCNF. The group determined that YPI is liable to the IRS for $24,000 in penalties and may have violated federal lobbying laws.

“They are required to disclose their lobbying activities to the IRS,” said Dan Epstein, executive director for Cause of Action. “Unfortunately, it appears that taxpayer backed nonprofits are engaging in lobbying activities without disclosing those activities.”

Under federal law, non-profit organizations are allowed to lobby politicians. But they must report the activities on their 990 forms.

On its IRS 990 forms for the period, YPI answered “No” to the question in Part IV of the form that asked “Did the organization engage in lobbying activities?” YPI also did not file Schedule C forms which are required of lobbying 501(c)3 organizations.

“Nonprofits are legally prohibited from using the federal funds they receive to lobby,” said Epstein.

Since YPI receives around 80 percent of its revenues from federal grants, there is a “rebuttable presumption” that the funds YPI used for lobbying commingled with the money it received through those grants.

Mixing finances in such a way is illegal, though the presumption can be rebutted if the organization can show that it keeps its funds separate.

“The fact that the organization failed to disclose its lobbying or political activities may be circumstantial evidence that it may have used federal dollars for impermissible purposes,” said Epstein.

“Disclosure prevents our tax dollars from being given to politically-connected nonprofits that may use those funds for impermissible activities.”